Nigeria gives oil exploration licenses to Chinese firms

China National Petroleum Corporation (CNPC) won an auction in Lagos for four of 17 blocks on offer, two located in the northeastern Lake Chad Basin and two in the restive southern Niger Delta, the country's main oil-producing region.

The rights in the Lake Chad basin blocks were sold for US$510,000 each, while the two in the Niger Delta were sold for US$5.01 million and US$10.01 million respectively.

Nigeria, which currently exports around 2.6 million barrels of oil per day, is Africa's largest oil producer and the world's sixth-largest exporter.

The deal followed a visit to Nigeria last month by Chinese President Hu Jintao (胡錦濤), who concluded important bilateral agreements in trade, oil, technical assistance and health care.

In exchange for the drilling rights, China has agreed to invest US$2 billion in northern Nigeria's Kaduna refinery, officials said.

commitment

The top civil servant in Nigeria's oil ministry, Anthony Chukwueke, said the 11 companies qualified to take part in Friday's auction had "shown serious commitment to setting up strategic downstream [oil] projects in Nigeria."

CNPC vice president Huang Yu told reporters his company was pleased with its auction victory.

"We are very excited because of the transparency and fairness of the whole exercise. The success at the bidding has given us the opportunity to be part of Nigeria's massive oil sector," he said.

"We are in Sudan, Niger, Chad, Algeria, Mauritania and now Nigeria. This development will foster greater economic ties between our two countries. We look forward to winning more oil blocks in Nigeria," he said.

Chukwueke told reporters the bid winners have until June 6 to pay the outstanding amount due on their purchase, and said another auction would take place before the end of the year.

stronger ties

Hu's trip to Africa and the Middle East last month was seen as an opportunity to strengthen ties with oil-exporting countries at a time when Chinese oil demand and world energy prices are rising spectacularly.

The week before Hu's visit, China's offshore operator CNOOC confirmed that it had signed a US$2.7 billion deal to buy a 45 percent stake in another Nigerian oil block, the firm's largest-ever foreign investment.

Chinese oil consumption is expected to rise from 6.59 million barrels per day last year to 6.95 million this year as its once largely agrarian economy continues its rapid industrialization and more of its citizens buy cars.

India, which like China is avid for energy sources, is also represented in Nigeria through the partnership of Mittal Steel and the state-run Oil and Natural Gas Corp.

The pair have their eyes on three oil blocks in exchange for a US$6 billion investment in a Nigerian refinery, a power station and a railway line.

Other bidders

Other firms selected to bid included Nigeria's Transnational Corporation, a local subsidiary of the Italian oil group Eni, and its Italian rival Agip in partnership with Lotus Energy.

Two Nigerian oil firms from the Niger Delta -- Clearwaters Consortium and Niger Delta United Limited -- were allocated operating production licences during the bidding exercise in a move designed to douse charges that wealth from the delta oil never benefited the region.